Equity Market Slump Hurting Alibaba - 11 December 2014

By: Stephanie Brown

Alibaba Group Holding Ltd (NYSE:BABA)’s inability to play nicely with regards to insider trading rules continues to be a point of concern for billionaire investor Mark Cuban. He argues the mega Chinese e-commerce company should never have been allowed to have their shares listed in the U.S. since the company has its headquarters in a communist country.

Cuban argues, it will be impossible to force Alibaba to conform to the SEC policies and regulations. He noted, the SEC’s particular sluggishness in making an effort to close various loopholes pertaining to insider trading, which is something the communist government may use to their advantage. Additionally, Alibaba will find it difficult to fend off any request for inside information about its operations if it comes directly from the Chinese government, according to Mr. Cuban. Ironically, Cuban does reportedly own huge stakes in the giant company. He himself admitted to being somewhat hypocritical on the issue. It seems that this investment opportunity was too tempting to pass up.

Technical Analysis

Alibaba’s shares have been corrected by more than 15% over last fifteen trading sessions after it generated a high of $120. The stock is currently trading below its 20-Day EMA of $108.23 with its RSI indicator at 45.42. The correction has been in line with equity markets as a whole, which have been falling substantially since the last three trading sessions.

Actionable Insight

Sell Alibaba Group Holding Ltd (NYSE:BABA) below $102.5 for target of $101.7, $101, with a stop-loss of $102.9.

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Since graduating from Erasmus University Rotterdam, Stephanie has become a prominent authority in binary options trading, providing first hand market insights and actionable analysis, whilst developing highly profitable customized trading strategies for YesOption clients.